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MVRV-Z Score

PreviousNet Unrealized Profit/Loss (NUPL)NextFunding Rates

Last updated 1 month ago

What is the On-Chain MVRV-Z Score Chart?

The MVRV-Z Score is used to evaluate whether Bitcoin is overvalued or undervalued compared to its "fair value."

How to Identify Bitcoin Bottoms and Peaks with the MVRV-Z Score? This metric utilizes three main measurements:

  • Market Value: Calculated by multiplying the number of BTC in circulation by Bitcoin’s current price. You can think of it as the market capitalization.

  • Realized Value: Instead of using Bitcoin’s current price, it considers the price at which each Bitcoin last moved (i.e., when it was sent from one wallet to another). It then sums up these individual prices, averages them, and multiplies by the total number of BTC in circulation.

  • Z-Score: A standard deviation test that reveals extremes between market value and realized value.

The MVRV-Z Score is calculated using the following formula:

Historical Significance of the MVRV-Z Score Based on the uploaded chart, the critical levels to watch for the MVRV-Z Score are:

  • Levels of 10 or above: When the MVRV-Z Score reaches 10 or higher, it indicates that the market is overvalued and approaching a potential peak. This scenario was notably observed during the bull market peaks of 2013, 2017, and 2021.

  • Levels of 1 or below: When the MVRV-Z Score drops to 1 or below, it suggests that the market is undervalued and nearing a bottom. This was evident during the bear market lows of 2015, 2018, and 2022.

These levels serve as a crucial guide to identifying whether the market is in an overbought or oversold zone.

Highlights from the Chart

  • Market Value (black line): Shows Bitcoin’s total market value at any given time.

  • Realized Value (blue line): Represents the total value based on the last prices of moved Bitcoins.

  • MVRV-Z Score (orange line): Analyzes the relationship between market value and realized value using standard deviation.

What Sets Our Version Apart? Our version of the MVRV-Z Score distinguishes itself through the use of block-based data for chart generation, offering several advantages:

  • More Detailed Analysis of Market Cycles: Block-based data allows users to gain a more granular understanding of market cycles.

  • Most Up-to-Date Information: Block-based data ensures that on-chain insights are presented in their most current form.

  • Rapid Market Movement Analysis: Real-time analysis of block-based data enables quicker detection and evaluation of market movements.